Mobile revenues increase as users surf the web instead of talking to other people

Mobile phone revenues in Northern Europe grew in the year to March 2011,
despite the continued decline in income from voice calls, because more and
more customers are using their mobiles to surf the web instead of talking to
other people.

Growth was particularly strong in the UK and Germany, where a relatively high proportion of consumers owned smartphones which they use for accessing Facebook, Twitter and browsing the internet on the move.Photo: ALAMY

By Katherine Rushton

10:30PM BST 20 Jun 2011

According to a report by ratings giant Fitch, income from data downloads more than offset the drop in revenue from voice calls over the period, helping to nudge overall revenues up by 1.1pc.

The growth was particularly strong in the UK and Germany, where a relatively high proportion of consumers own smartphones which they use for accessing Facebook, Twitter and browsing the internet on the move.

However, Fitch warned that the increasing usage of mobile phones to access the internet posed a risk to mobile phone operators, as voice over IP services such as Skype could replace traditional voice calls, and social networks such as Facebook and Twitter could replace texting - and not just by young people.

It said that revenue from data downloads would not be enough to offset the decline in voice revenues without a substantial shake up of the way mobile operators charge for data services.

"There is a risk that mobile data might be partly used as a substitute for voice and SMS services. Mobile operators need to rebalance tariffs, just like fixed operators have done. Most at risk are those with a high level of smartphone penetration," the report said.

The picture was very different in Southern European countries such as Spain and Italy, where revenue from data downloads has fallen from mid-2008 onwards as more and more people have lost their jobs and have dispensed with smartphones,

"Mobile data is still a luxury, nice to have product. Like any other discretionary product, revenues from mobile data will be particularly susceptible to economic cycles and consumer pressures," Fitch said.

The decline in revenue from voice calls in Southern Europe also gathered pace, leading to a 5.4pc shrinkage in overall mobile revenues in those countries.

Meanwhile, Ofcom has given mobile phone operators the greenlight to trade their radio spectrum rights, giving them flexibility to use it more efficiently.

The legislation, which covers 900 MHz, 1800 MHz and 2100 MHz spectrum, allows Everything Everywhere to sell the spectrum it was asked to dispose of by the Office of Fair Trading when the company formed. It also allows Vodafone and O2 to cash in on spectrum gifted to them by the government in the 1980s.